JoeFromPA

Hi all,

I'm a long-time browser of rennlist, infrequent contributor, and a part-time Porschephile who has only had the pleasure of owning a '99 boxster, which was sold last year to trade for a 2001 BMW m5 to perform family and client duty, which it does admirably.

One of my closest friends has opened, expanded, and is winding down a BMW restoraton business.

He and I have brainstormed a business idea around a combination of buying & selling 993s, performing custom services for customers, and offering some unique experiences.

I wanted to throw out our business idea on here and get some buy-in from the community. I realize there are a number of folks doing similar things (Holt, Victory, RPM, TruSpeed, Sloan) but I think there's a combination of poor experiences and differentiation that this is still a viable business and passion to pursue.

The 993 Plan

We would strive to have an inventory of ~15 993s at all times and specifically try to focus on having 1-2 of each major variant: RWD, AWD, OBDI, OBDII, Automatic, Turbo, etc.

The purpose would be so that a 993 fan could find online or in-person one he/she really likes, but could take the time to drive multiple variants to make sure they know which feels best for them. There are folks who struggle with 4s vs. turbo and can afford the difference, or folks who struggle between a Carrera 4 and RWD 6-speed version, or folks who want the simplicity of the 1995 setup but don't know if they'll miss the broader torque of the varioram setup. The best answer to these questions involves a back to back examination.

Models would be mid-market: i.e. 40-85k miles, full documentation, super clean, no paint or bodywork, but perhaps a few owners or possible mild modifications (i.e. steering wheel, M030 suspension). Very clean driver's cars.

The intended margin for us would be 10-15% gross on the car itself with no intention of negotiation. The price would already include a PPI at a local Porsche specialist of the buyer's choosing upon a deposit. We would offer to eat the cost of the PPI if the buyer backed out due to mechanical findings - if the buyer backed out post PPI, we would offer to deduct the cost from the deposit.

The aim would be to sell roughly 5/month minimum with hopes of growing to 10/month.

The Custom Shop

My biz partner/friend is a little bit of a magnus walker. He's an artist and an artisan. We would offer to our customers a range of custom services (i.e. unique interior bits, custom metalwork, or hell a matching piece of furniture that uses the same look/feel of their selected Porsche). This would be small-time one-off stuff and would be with limited availability obviously.

The second part would be to aim to "setup" the car as the buyer wishes - wheels, seats, steering wheel, exhaust systems, etc. - with a special philosophy of "Lightness without Sacrifice" where we'd have a variety of options and their relative weight reductions available on our recommended list, with a promise that if the customer didn't like the option upon delivery we'd return it to stock minus the labor cost of installation in the first place.

The 993 experience

I'm exploring the legal and insurance ramifications of this but we have talked about purchasing a very high mileage, well maintained 993 and using it to showcase custom shop ideas but also to allow people to "rent a 993 track day" where we'd set it up for track use (streetable summer tires, street/track pads, fluids), bring it to the track, and allow the person to experience the 993 on the track for a day.

This would primarily be a marketing opportunity for the business as well as an embracing of the community and an opportunity for potential owners to give a 993 a shot on the track before purchasing one.

...

I'll stop there to keep the post shorter but that's the primary business aim. The shop would be located pretty close to Holt Motorsports & Porsche of the Main Line in SE PA. Originally a competitive concern, my feeling now is that it would actually be an attraction since Porsche-fanatics could see the variety selection of 911s offered by Holt, the new stuff offered by Porsche, and the 993 dedication offered by us....all within a short drive. I think the closeness would actually be a benefit, rather than a deterrent, in this type of business.

I would welcome the communities thoughts. This is still in the early stages but I am discussing inventory financing options (i.e. revolving credit) with some local banks.

ehanauer

Restricting your focus to 993s is too narrow a market. Enlarge the scope. All aircooled 911s? 964s and 993s?

Just my 2cents, and that's about what it's worth.

JoeFromPA

Appreciate the thoughts. Any reason you think it's too narrow?

To be open, we discussed doing 65-~73 911s as well to really capture the beginning and end of the air-cooled 911 lifespan (and, also, the SCs and G50s, though desirable, don't offer quite the margin needed for a limited inventory boutique specialist).

TheBen

I agree with ehanauer. Just 993s is too narrow. Maybe don't go so broad as the 60's and early 70's cars but maybe SC - 993? You'd certainly attract a bit more foot traffic by having more of a selection.

JoeFromPA

Good input and thank you. My initial concern is over capital availability, quite frankly. 15 993s is the range I was discussing is probably a $750k inventory. Adding another, say, 10 from SC's to 87-89s and maybe a few 1968-1971 is totally doable - but adds probably another $500k in required capital (as well as some additional logistical complexity/floorspace requirements).

Those are all surmountable obviously if it increases success of the business.

Quadcammer

You are gonna sell 120 993s are year? Make that 120 clean, no paintwork, mid mile 993s?

Heres the problem.

You are gonna be sourcing these cars from the same channels that holt, truspeed, sloan, etc source them from. This additional competition is going to drive up the price of cars. If you truly want to have one of each of these models, you will end up over paying for cars that are gonna sit.

Now then, with an average price of say $45,000, your 120 car per year goal has you bringing in $5.4 million in revenue. I somehow doubt that this is realistic or sustainable.

Then, you are gonna have tire kickers come down, beat the snot out of all 15 of your models on test drives, and then go buy a car from ebay.

Furthermore, how are you differentiating yourself? The test drive thing? Id say a lot of these cars are bought a plane trip away. if you don't have the specific car I want, I'm not flying to your location to test drive all the models.

To sum up:

1. I think you will have trouble finding enough cars you need without lowering standards
2. I think you will have trouble selling the number of cars you want to
3. I don't think you have enough differentiation to be in such close proximity to Holt, especially in a not 4 season driving climate.
4. I guess there might be money in the customization and decorative stuff, but thats a time hog.
5. Renting a 993 for track days isn't a bad idea, but who is your target market here? Its only realistic to do it within an hour or two of your location. I don't think anyone is flying to PA to rent a 993 for a track day. A aventador? maybe...a high mile plain jane 993? meh.

JoeFromPA

Hi Quadcammer - thanks for the thoughts. My initial target would be no less than 60 clean, no paintwork 993s per year sold which would be ~$2.7mm in revenue + maybe a few hundred thousand on the side stuff. That's a 1-2 year target.

That's just to clarify my target.

My intention behind the test driving was to require a commitment of interest in one car but with the option to explore others while on-site. Tire kicking is a possibility, but this is not a main-road showroom - I don't need the expense of a main-road property for this type of boutique offering in today's internet world (no offense to Holt and many others, but prime-time property was a necessity when they founded - it's not now).

Can you explain how the close proximity to Holt is a competitive issue in this specific marketspace? This is more rarely, nowadays, a walk-in business. However, I see opportunity in that people may look at one place and stop-in at the other while they are nearby - and I feel it's more of an opportunity for me to ride the coattails of Holt's name reputation than it is a competitive issue.

...

I think #1 is a fair observation and concern. #2 is totally up to how well we run and market our business. #4 is correct, it's a small time attraction and hopeful medium term reputation builder since reputation is everything. #5 is for local people or folks who live near one of the major tracks (so basically residents of VA, PA, DE, NJ, NYC, and CT). And, again, it's a reputation builder and, frankly, just for fun - it's not a business building exercise but more a community service for people who don't own a Porsche or perhaps track an SC but would like to feel a 993.

...

Really loving the feedbacks folks - thank you.

pirahna

It's going to be hard to source 10+ clean 993's a month that you can buy and still have much profit left in them. Doesn't seem like a viable business model to me. It might be OK for a wealthy person to do for a hobby if profit is not a concern.

GT3 Tek

Speaking from experience, there are two really good ways to turn a large pile of cash into a really small pile of pennies.

Race Porsche 911's at any level or open a Porsche only business.

JLJ11

open a place that does top and bottom end rebuilds of high quality for 20% less than the competition and i'll come spend my money.

recreate a shop with the expertize of ninemeister or similar and build high quality bhp increasing rebuilds and i'll come spend my money.

Open a Ruf Franchise and build Ruf conversions!

whatever u do, best of luck. finding that many 993's seems tricky.

Quadcammer

Competition with Holt:

Holt has an established name and reputation. You, as far as I know, don't have that yet. Unless I'm looking for a very specific car, why do I go to you over him? I guess being in the same area means if people visit his dealer, they also stop at yours, but thats gonna require some solid advertisement.

all due respect,
I don't think 2 is up to you. A lot of it is the market. Interest in sports cars will dramatically slow for 4 months of the year. In fact, interest in car buying seems light regardless of make/model...and you've limited yourself to 993s, a small subset, of a smaller manufacturer. The target market just may not be there.

I think that last line is important. You need to do a ton of market research to see what a realistic amount of sales is. 60 cars a year is doable...120 i think is very ambitious.

If I were going to do this, I would not limit to porsches, but rather similar enthusiast cars.

E30/E36 M3s, NSX, Ferrari, Lotus, AM, various 911 models, etc. Expands the market a bit, and is also, imho, a more interesting business to run.

il pirata

I am going to agree with a point a number of people have brought up...being able to source the number of cars you need to drive the volume is going to be a big issue. I also think just 993s is too focused...adding other air-cools or pre 1998 models make sense.

Almost every dealer out there makes better margin on service than sales, and better margin on finance than service. I like the thoughts of others to add service but who is the wrench? And I mean not your average Joe but the kind of mechanic people will fall in love with AND already has EXPERIENCE. Does not sound like your partner or you is that.

I think there is room out there for a great service shop in several areas of the country (especially North Denver please!). I do not really see an easy path for selling older Porsches only.

PNogC2S

I think your business plan has several inherent flaws that would be insurmountable as a stand-alone business.
As a number of others have pointed out, simply finding enough good 993's to support the business you describe is going to be difficult. Then to find them at a price that leaves you enough room to turn a profit, makes it even more of a challenge.
In the end I think you will drive up the price on good "driver" quality 993's and not have a sustainable business.
You need only look at the amount of time many on this board have spent looking for a "good" car and then you need to be able to do that on an ongoing basis year after year...
If this is hobby type business, sort of like the retired CEO that opens a winery because he likes wine, then sure, this could work.
If you are looking to make a living off this, I think you are in for a tough road.
There have been other dealers that have tried going that direction and ended up supplementing their inventory with a variety of years and makes of sports cars. Look at Cars Dawydiak as an example (www.carsauto.com). They used to have a lot of 993's a few years back and seem to have moved beyond that as focus.
Best of luck to you.

JoeFromPA

Thank you all - will take this under consideration.

My intent was to specialize and be the best within the niche - I've always found that path to be very successful in my endeavors.

When I look at what others are doing in this space, they are diversified across a wide variety of models but they aren't known for being the "go to" guys for any particular model. Of course, they may have done that either out of necessity or out of growth.

I'm going to evaluate this some more and appreciate the feedback. Might be we plan on more models at launch - might be we don't but re-evaluate 6 months in.

This is a very small boutique business and I'm not planning on drawing income from it in the first year. My partner will. However, I obviously want it to be setup for success from day one.

Juha G

And not to forget...that 15pcs 993 inventory will quickly turn into a mix and match of porsches, mercedes, bmw's of variable age and condition etc. Whatever people want to trade in for that 993 they buy.
The idea is nice but i suggest you do your homework well before stacking up your hard earned...